Will Zuckerberg address Facebook investors?

Commentary: The CEO would be wise to get on the conference call

Facebook CEO Mark Zuckerberg departs after a presentation during the company’s IPO road show in his notorious hoodie.

SAN FRANCISCO (MarketWatch) — Facebook Inc. Chief Executive Mark Zuckerberg probably views his company’s first earnings report as a public company late on Thursday as he does a trip to the dentist.

Zuckerberg, who dropped out of Harvard University to work on the then-fledgling social-networking site, seems to regard Wall Street as a necessary evil and one that can be dealt with by other high-ranking executives, Chief Operating Officer Sheryl Sandberg and Chief Financial Officer David Ebersman. He would likely prefer to be out doing deals and working with the software engineers at what is now the world’s largest social network.

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After Facebook’s
FB, -1.18%
IPO debacle in May, Zuckerberg might not look too kindly on investors, especially those who were irritated when he wore his infamous hoodie to meet with fund managers during the IPO road show. Facebook’s shares are down 23.43% since the offering. Read about low expectations for Facebook earnings.

“I think he has to be on the call,” said Wedbush Securities analyst Michael Pachter, who is now known for starting up the debate over “hoodie-gate” with his comments during Facebook’s road show. “If he doesn’t show up, then he probably should not be CEO. Part of the responsibility of being CEO is dealing with investors, and if he thinks that is something he doesn’t want to do, he shouldn’t be CEO. I’m sure he has gotten advice that he should be on the call.”

A Facebook spokeswoman declined to comment on who from the company will be on the call to discuss earnings with Wall Street.

Facing partners and shareholders

Zuckerberg could make an appearance at the beginning of the call, and talk about the corporate vision and offer a grander update of Facebook’s plans, but not participate in the Q&A with analysts. That way he can be in control, and not have to deal directly with pesky investors and their questions about slowing revenue growth, or how the site will make money from the burgeoning mobile use of Facebook.

“While we don’t expect him to play a major role, being that he is the sole controlling shareholder of the company — and given that he can simply dial in — we don’t see any valid reason he will not be on the company’s first earnings conference call,” wrote Sam Hamadeh, chief executive of PrivCo, in an email. “To do otherwise we think would be thumbing his nose at his new business partners, i.e. the public shareholders.”

Most CEOs in Silicon Valley participate in their companies’ earnings calls with investors. Even at Apple Inc.
AAPL, -1.54%
where the late Steve Jobs rarely appeared on investor calls in recent years, current chief Tim Cook is always on the company’s call, as he was on Tuesday to answer specific questions. Apple’s call is led by CFO Peter Oppenheimer, but Cook participates in the Q&A with investors.

Among Silicon Valley Internet companies, Google Inc.’s
GOOG, -0.73%
Chief Executive Larry Page has been on the investor calls, until he lost his voice and has not been heard from in the last two quarters. Yahoo Inc.’s
YHOO, -1.15%
new chief Marissa Mayer was noticeably absent last week, on what also was her first day on the job. Previous Yahoo CEOs have been on the calls. See commentary on Mayer skipping Yahoo’s call.

“I don’t expect him to hang around to do Q&A,” commented Pachter. “I expect him to get up there and make a speech. And then let him go back to hacking or whatever he does.”

Waiting for guidance

Many other high-profile tech CEOs participate in their company earnings calls along with the CFO, including Intel Corp.’s chief Paul Otellini, Cisco Systems Inc.’s CEO John Chambers and Hewlett-Packard Co.’s current chief Meg Whitman. Oracle Corp. CEO Larry Ellison shares the call with co-presidents Safra Catz and Mark Hurd, while Catz, also Oracle’s CFO, runs the session.

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Microsoft Corp. and Amazon.com Inc., however, are among the tech firms with CEOs who don’t often take part.

Another question investors are wondering about as they gear up for Facebook’s earnings is whether the company is going to give financial guidance. Some believe Menlo Park, Calif.-based Facebook will adopt the tactic used by Google, which does not give investors an outlook on earnings.

“We don’t know for sure, but we think it is unlikely” Facebook will give guidance, wrote Doug Anmuth, a J.P. Morgan analyst, in a note Monday. “Without guidance, we believe Facebook will need to provide even more color on the early success of newer ad formats like Sponsored Stories and the shift to mobile, given Street expectations for second-half 2012 revenue acceleration and timing ahead of the August lockup expiration.”

Whatever happens on Facebook’s call later in the day, the company, including its chief executive, needs to show it cares about investors, even if they may not have much of a voice.

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